Question 1

The holding period for boot in a like-kind exchange begins on the date of the exchange.

Accepted Answer

A) True 
 B)False

Question 2

A business airplane exchanged for a fleet of trucks,all used for the delivery of manufactured goods,is a qualifying like-kind exchange.

Accepted Answer

A) True 
 B)False

Question 3

Carol had adjusted gross income of $40,000 in 2015.Late in the year she had an accident with her car and sustained a $1,000 loss,the amount of her insurance policy deductible.Her home was broken into and she had $15,000 of jewelry stolen (basis = $12,000); her insurance only covered $5,000 of this loss.What is her deductible loss?

Accepted Answer

A) $7,800 
B) $3,800 
C) $7,000 
D) $3,000 
A) $7,800 
B) $3,800 
C) $7,000 
D) $3,000

Question 4

A transfers machines valued at $170,000 (basis = $150,000)along with $30,000 cash to AB Corporation and B transfers real property valued at $320,000 (basis = $310,000)to the corporation.A receives 40 percent of the outstanding stock and B receives 60 percent.B also receives $20,000 from the corporation.What are A's and B's recognized gains,respectively,on these transfers?

Accepted Answer

A) $20,000,0 
B) 0,$20,000 
C) 0,$10,000 
D) 0,0 
A) $20,000,0 
B) 0,$20,000 
C) 0,$10,000 
D) 0,0

Question 5

Which of the following is not a characteristic of involuntary conversions?

Accepted Answer

A) Gain only is deferred 
B) The taxpayer can receive cash to invest in qualifying replacement property 
C) The provision applies to both realty and personalty 
D) All of these are characteristics 
A) Gain only is deferred 
B) The taxpayer can receive cash to invest in qualifying replacement property 
C) The provision applies to both realty and personalty 
D) All of these are characteristics

Question 6

Elizabeth exchanges her retail storage assets for retail displays.In this like-kind exchange,Elizabeth receives $2,000 in cash.The storage assets have a fair market value of $12,000 and Elizabeth's basis in the assets is $3,000.The displays have a fair market value of $10,000 and a basis of $8,000.What is Elizabeth's realized gain on the exchange?

Accepted Answer

A) zero 
B) $3,000 
C) $6,000 
D) $9,000 
A) zero 
B) $3,000 
C) $6,000 
D) $9,000

Question 7

Boot received in a like-kind exchange never causes loss to be recognized.

Accepted Answer

A) True 
 B)False

Question 8

To defer gain recognition on an involuntary conversion,qualifying property must be obtained
within a specified time period.

Accepted Answer

A) True 
 B)False

Question 9

The taxpayer-use test for qualifying replacement property

Accepted Answer

A) applies only to personalty 
B) requires replacement property used by the taxpayer to be used in the same business as the converted property 
C) only requires leased realty to be replaced with other leased realty 
D) Is more restrictive than the functional-use test 
A) applies only to personalty 
B) requires replacement property used by the taxpayer to be used in the same business as the converted property 
C) only requires leased realty to be replaced with other leased realty 
D) Is more restrictive than the functional-use test

Question 10

What is the functional-use test in an involuntary conversion?

Accepted Answer

The functional-use test requir

Question 11

Sam's land was condemned for a sewage treatment plant.He received $600,000 for the land that had a basis of $650,000.What is his realized and recognized gain or loss,respectively,on this involuntary conversion?

Accepted Answer

A) ($50,000),($50,000) 
B) ($50,000),0 
C) $50,000,$50,000 
D) 0,0 
A) ($50,000),($50,000) 
B) ($50,000),0 
C) $50,000,$50,000 
D) 0,0

Question 12

Which of the following would not be considered an involuntary conversion?

Accepted Answer

A) The theft of jewelry 
B) Sale of property in a flood zone 
C) Condemnation of a building for a highway 
D) Destruction of a home by a tornado 
A) The theft of jewelry 
B) Sale of property in a flood zone 
C) Condemnation of a building for a highway 
D) Destruction of a home by a tornado

Question 13

Elizabeth exchanges her retail storage assets for retail displays.In this like-kind exchange,Elizabeth receives $2,000 in cash.The storage assets have a fair market value of $12,000 and Elizabeth's basis in the assets is $3,000.The displays have a fair market value of $10,000 and a basis of $8,000.What is Elizabeth's recognized gain on the exchange?

Accepted Answer

A) zero 
B) $2,000 
C) $6,000 
D) $9,000 
A) zero 
B) $2,000 
C) $6,000 
D) $9,000

Question 14

Which of the following is not a required characteristic of a qualifying Section 351 transaction?

Accepted Answer

A) If more than 20 percent of the stock is transferred for services,property must also be transferred by the service provider. 
B) Gain may be recognized if the transferor receives something other than stock. 
C) The transferors must control the corporation after the transfer. 
D) Control requires shareholders owning only 80 percent of the voting stock if nonvoting stock is outstanding. 
A) If more than 20 percent of the stock is transferred for services,property must also be transferred by the service provider. 
B) Gain may be recognized if the transferor receives something other than stock. 
C) The transferors must control the corporation after the transfer. 
D) Control requires shareholders owning only 80 percent of the voting stock if nonvoting stock is outstanding.

Question 15

What is the limit of the gain that can be recognized on a like-kind exchange?

Accepted Answer

The recognized gain on a like-

Question 16

A transfers machines valued at $170,000 (basis = $150,000)along with $30,000 cash to AB Corporation and B transfers real property valued at $320,000 (basis = $310,000)to the corporation.A receives 40 percent of the outstanding stock and B receives 60 percent.B also receives $20,000 from the corporation.What is A's basis for his AB stock?

Accepted Answer

A) $180,000 
B)  $170,000 
C) $160,000 
D) $150,000 
A) $180,000 
B)  $170,000 
C) $160,000 
D) $150,000

Question 17

Sophie received a 30 percent interest in a general partnership in exchange for property valued at $35,000 (adjusted basis = $25,000)and services valued at $5,000.In addition,the partnership assumed the $10,000 liability on the property.What is Sophie's basis in her partnership interest?

Accepted Answer

A) $20,000 
B) $23,000 
C) $25,000 
D) $39,000 
A) $20,000 
B) $23,000 
C) $25,000 
D) $39,000

Question 18

What is the amount of the casualty loss on a business truck that had a fair market value of $14,000 before an accident and $4,000 after an accident,if its adjusted basis is zero?

Accepted Answer

A) $14,000 
B) $10,000 
C) $4,000 
D) 0 
A) $14,000 
B) $10,000 
C) $4,000 
D) 0

Question 19

Expected insurance settlements have no effect on the timing of the deduction for a casualty loss.

Accepted Answer

A) True 
 B)False

Question 20

When may a taxpayer deduct a casualty loss in a year other than the year in which the loss occurred?

Accepted Answer

A casualty loss may be deducted in the y

The holding period for boot in a like-kind exchange begins on the date of the exchange.

A business airplane exchanged for a fleet of trucks,all used for the delivery of manufactured goods,is a qualifying like-kind exchange.

Which of the following is not a characteristic of involuntary conversions?

Boot received in a like-kind exchange never causes loss to be recognized.

To defer gain recognition on an involuntary conversion,qualifying property must be obtained within a specified time period.

The taxpayer-use test for qualifying replacement property

What is the functional-use test in an involuntary conversion?

Sam's land was condemned for a sewage treatment plant.He received $600,000 for the land that had a basis of $650,000.What is his realized and recognized gain or loss,respectively,on this involuntary conversion?

Which of the following would not be considered an involuntary conversion?

Which of the following is not a required characteristic of a qualifying Section 351 transaction?

What is the limit of the gain that can be recognized on a like-kind exchange?

Sophie received a 30 percent interest in a general partnership in exchange for property valued at $35,000 (adjusted basis = $25,000)and services valued at $5,000.In addition,the partnership assumed the $10,000 liability on the property.What is Sophie's basis in her partnership interest?

What is the amount of the casualty loss on a business truck that had a fair market value of $14,000 before an accident and $4,000 after an accident,if its adjusted basis is zero?

Expected insurance settlements have no effect on the timing of the deduction for a casualty loss.

When may a taxpayer deduct a casualty loss in a year other than the year in which the loss occurred?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Income Taxation of Individuals

Wealth Transfer Taxes

Filters

Exam 8: Tax-Deferred Exchanges

The holding period for boot in a like-kind exchange begins on the date of the exchange.

A business airplane exchanged for a fleet of trucks,all used for the delivery of manufactured goods,is a qualifying like-kind exchange.

Which of the following is not a characteristic of involuntary conversions?

Boot received in a like-kind exchange never causes loss to be recognized.

To defer gain recognition on an involuntary conversion,qualifying property must be obtained within a specified time period.

The taxpayer-use test for qualifying replacement property

What is the functional-use test in an involuntary conversion?

Sam's land was condemned for a sewage treatment plant.He received $600,000 for the land that had a basis of $650,000.What is his realized and recognized gain or loss,respectively,on this involuntary conversion?

Which of the following would not be considered an involuntary conversion?

Which of the following is not a required characteristic of a qualifying Section 351 transaction?

What is the limit of the gain that can be recognized on a like-kind exchange?

Sophie received a 30 percent interest in a general partnership in exchange for property valued at $35,000 (adjusted basis = $25,000)and services valued at $5,000.In addition,the partnership assumed the $10,000 liability on the property.What is Sophie's basis in her partnership interest?

What is the amount of the casualty loss on a business truck that had a fair market value of $14,000 before an accident and $4,000 after an accident,if its adjusted basis is zero?

Expected insurance settlements have no effect on the timing of the deduction for a casualty loss.

When may a taxpayer deduct a casualty loss in a year other than the year in which the loss occurred?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Income Taxation of Individuals

Wealth Transfer Taxes

Filters